CCI imposed penalty on Kerala Film Exhibitors Federation for Contravening Competition Law

The Competition Commission of India (CCI) on 8 September 2015 imposed penalty on Kerala Film Exhibitors Federation (KFEF) for conducting activities in contravention of Section 3 of the Competition Act, 2002.

The decision came following Informant M/s Crown Theatre’s allegations of anti-competitive conduct by KFEF in not allowing screening of Malayalam and Tamil films in its theatre since May 2013. CCI observed that the distributors in the film industry denied Malayalam/Tamil films to the Informant due to the ban imposed by KFEF.

Later, it was found that due to its differences with M/s Crown Theatre, KFEF ensured that the theatre did not receive Malayalam and Tamil movies for release. Such denial of Tamil and Malayalam language movies for screening was found to be in contravention of section 3(1) of the Competition Act, 2002.

Further, two of KFEF’s office bearers PV Basheer Ahmed (President, KFEF) and MC Bobby (Secretary, KFEF) were found to be in-charge of and responsible for the conduct of business of KFEF during the relevant period under section 48 of the Act.

While imposing penalty under section 27 of the Act, the Commission observed that the objective of penalty is to discipline the erring entities for their anti-competitive conduct as well as to create deterrence to prevent future contraventions.

The Commission also took into account the rampant instances of anti-competitive conduct by associations in the film industry and past orders of the Commission where heavy financial penalties have been imposed.

After thorough investigation, the Commission issued following orders:
• Cease and desist from indulging in anti-competitive conduct.
• Penalty of 82414 rupees on KFEF calculated at the rate of 10 percent of its average income.
• Penalty of 56397 rupees and 47778 rupees on PV Basheer Ahmed and MC Bobby respectively, calculated at the rate of 10 percent of their average income.
• KFEF has been directed not to associate PV Basheer Ahmed and MC Bobby with its affairs, including administration, management and governance for a period of two years.
• Furthermore, KFEF has been directed to organize at least five competition awareness and compliance programmes over next six months in the State of Kerala for its members. The compliance of this shall commence before expiry of 60 days from the receipt of the order by OP.

Section 3(1) of the Competition Act, 2002
As per the Section 3(1) of the Competition Act, 2002, no enterprise or or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.